Oil steady as Storm Gordon enters US Gulf

Oil prices were little changed as energy infrastructure on the US Gulf Coast braced for a hurricane, but gains were capped as a stronger dollar and report of rising stockpiles at the Cushing, Oklahoma hub weighed.

US West Texas Intermediate crude futures rose 7 cents to settle at $US69.87 a barrel on Tuesday after earlier hitting a session high of $US71.40.

US markets were closed on Monday for Labor Day.

Brent crude, which traded on Monday, ended 2 cents firmer to settle at $US78.17 a barrel, down from a session high of $US79.72.

Both benchmarks jumped earlier in the session as more oil producers pulled employees out of Tropical Storm Gordon's path and shut-in nine per cent of US Gulf of Mexico oil and gas production on Tuesday.

But the storm, expected to make landfall as a category 1 hurricane overnight, shifted eastward, reducing its threat to major production areas and most Gulf Coast refineries.

Vessel traffic along the US Gulf Coast was also under restrictions ahead of Gordon.

The Gulf of Mexico is home to 17 per cent of US crude oil production and 5 per cent of natural gas output daily, according to the US Energy Information Administration.

On land, the Gulf Coast serves as a major US refining hub.

Prices moved lower, however, as market participants saw the market as overbought.

"Initial reaction this morning appeared exaggerated as disruption to Gulf of Mexico production infrastructure isn't likely to extract a major amount of crude from the market," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

"The larger impact of the storm is apt to fall on Gulf coast refinery activity that could be affected by power outages."

"Crude oil export losses from Iran due to US sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production," Tchilinguirian said.